Fundamentals remain strong
Civitas Social Housing’s (CSH’s) discount to net asset value (NAV) has yet to recover from an activist short seller attack last year, with its share price almost as low as it has ever been in over five years since it launched. Although CSH’s manager made a strong rebuttal to the allegations made by the short seller, regulatory concerns around the financial strength of some of its housing association tenants has persisted throughout its existence. To aid regulatory compliance, CSH plans to add a new clause to leases that would enable greater risk-sharing with the housing associations and allow them to temporarily stop paying rent in certain circumstances.
The fundamentals that support growth in the sector remain strong and aren’t going away, namely increased demand from individuals and a lack of supply. The high dividend yield/large discount to NAV that CSH’s shares are trading on seem appealing.
Civitas Social Housing is a real estate investment trust investing into existing portfolios of built social homes in England and Wales. Investment Manager: Langham Hall UK Services LLP Investment Adviser: Civitas Housing Advisors Limited
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